As I’ve mentioned any number of times, my family lives in a smaller “starter” home. While it was the typical size of a single family home back in the 1960s when it was built, it’s considerably smaller than the typical home built in the last few decades by at least half.
Especially now, with so much uncertainty going on in the world, having a small mortgage gives us huge peace of mind. We lucked out by being able to purchase our home back in 2011 when the housing market was more affordable, but we purposefully decided never to buy up and out of our home. That choice has been a huge reason why we’ve been able to save so much of our incomes, and why we could get by on just one income now if we had to.
While there are times that we wish we had a bit more space, our 1,350 square foot home is plenty big enough for the four of us plus two large dogs, and big enough to throw dinner parties when we aren’t in the time of social distancing. And then, of course, our neighborhood is absolutely fabulous, which is worth so much more than a big, fancy home.
A while back, I asked in my Women’s Personal Finance Facebook group for women who were willing to share their stories on my blog. We have so many wonderful voices writing about personal finance, but I’m always looking for new ones. The narrative continues to be that men are the ones talking about money, and one of the big goals of this blog and that Facebook group are to show how untrue that stereotype really is.
Christy from Financially Fit Teacher reached out to me with an idea to write about her family’s small home, and I’m excited to feature her today. The norm in the United States and other parts of the world is still to buy the biggest home you can afford – and then trade up as soon as you can.
There are those of us who have made decisions different than the status quo, though, and I want to encourage people to think differently about what is expected. We may have smaller homes, but they allow us to afford a bigger, more financially secure life.
Small House, Big Life – Christy from Financially Fit Teacher
My husband and I bought our home in 2008 just before the market crashed. In spite of our modest incomes as a teacher and a social worker, the whole world was telling us to buy as much house as we could. Friends, realtors and bankers told us over and over again to take out a loan for $350,000, live in the house for two years, then flip it and buy a bigger one.
This idea dumbfounded us. First of all, the mortgage payment on a loan that size would’ve eaten up most of our monthly income. Secondly, it seemed inconceivable that housing prices would keep going up at 7% a year. Third, we had over $110,000 in student loans, and adding that much more debt to our lives seemed very scary. Finally, the whole buying/selling/moving gig just sounded really stressful to us.
So we went against all of the advice and bought an 805 square foot house for $168,000.
Twelve years later we still love coming home to our cozy, peaceful, small home. Our tiny space has allowed us to create a big life full of opportunities we never could’ve imagined, and we have no plans to trade up. Here’s why:
Time Savings
1. Because we stayed small we were able to buy into a nice neighborhood that’s close to both of our jobs. We each have a 10 minute bike ride or a 7 minute drive to work. The average American spends about 27 minutes commuting one way, according to The Washington Post.
Our short commutes free up time each day for us to eat meals together, exercise, decompress, and prepare for the next day. (Angela: 27 minutes is a SHORT commute around here these days! Though I’m lucky to have one that’s just 12 minutes – or an hour if I run to work)
2. It’s really hard to actually lose something in 805 square feet, so we don’t spend a lot of time looking for lost keys or hats. Similarly, everything we need is literally only 1 or 2 rooms away. Gone are the days of “having to go all the way upstairs” to get something.
3. Fewer chores? Yes, please. It takes 40 minutes to clean the entire house, top to bottom.
Environmental Savings:
The carbon footprint of our house is 43% lower than the average 2 person household in our zip code according to the EPA’s Carbon Footprint Calculator. We’re always looking for ways to decrease our environmental impact, and our small house has been an easy way to amplify our efforts.
Money Savings
1. You can only fit so much into 805 square feet. This means we only buy what we really love because there is literally no room for stuff we feel meh about. This goes for furniture, artwork, kitchen tools, clothing, backpacking gear, literally everything we own.
If we buy something to bring into our home, we have to love it more than what we already have because there’s not room for both. The end result is that we hardly buy anything at all, and we’re really comfortable and happy with the things we do have.
2. We remodeled almost the entire home within the first 5 years of living in it. We were able to cash-flow all of the projects because of how small they were. We replaced the windows, but there are only 7.
We put in a granite countertop, but it’s only 8 feet long so we even got a remnant price. We were able to buy eco-friendly flooring because we only needed 250 square feet. The entire roof only cost $2,000.
We put in an on-demand water heater and gained space and energy savings. The end result was that in a relatively short time we got cosmetic upgrades that we loved and energy efficient upgrades that started saving us money right away.
3. We pay less than $100 a month to heat our house in the middle of a Montana winter. In the summer we’re able to cool it off at night by opening the windows and then keeping all the cool air in with energy efficient windows and blinds.
4. A smaller, less expensive house means lower property taxes.
A Whole Lot of Life in a Small House
According to the averages in this infographic, we’re saving $535 a month by having an 800 square foot home instead of a 1600 square foot home. In real life, that extra cash has meant paying off our $110,000 in student loans, cash flowing my Master’s program, maxing out both of our IRAs, my husband’s individual 401k, our HSA, and my 457b.
We’re on track to pay off our mortgage early and we’ve gotten in a few incredible vacations. Our incomes are significantly higher now than they were twelve years ago, and that’s made a lot of our savings possible. But since we didn’t let our housing costs increase when our incomes did, we’ve had a lot more money to pay off our debt and aggressively fund our future.
We are constantly inundated with tv shows and commercials about buying bigger, fancier homes, while the benefits of a small house are almost never publicized. We get led down the path of believing that we need a whole lot of space when we actually might be happier with less. Well, I’m here to speak up for the little house on the block. It may just be the key to a big life.
What size home do you live in? Do you ever get the urge to buy up?
we have a big house but it cost 98k back in ’01 or so. this beast has been paid off for 5-6 years now. mrs. me bought it before we met and we won’t be selling until we leave the area. i can’t stomach the cost of realtor fees and moving to downsize locally plus we have studio space. in my opinion no dirty HSA and our own outdoor space/garden are as important as indoor square footage.
Clearly you have a lot of the same reasons to stay in the big house – and then there’s plenty of room for art and eBay goods 😉
Thanks for sharing, Christy! I’d love to see some pics of your home. Maybe on instagram or elsewhere on your blog?
Sadly, there’s little incentive for anyone to sell us on smaller homes. Realtors, mortgage companies, and home builders all make more money on bigger, not smaller. It takes a lot of courage to go against the grain, but it absolutely does lead to a higher quality of life. Great job making a housing decision that will benefit you for the rest of your life.
Our home isn’t quite as small (2,300 sq. ft. Ok, not small at all.) but our familiy of 6 packs it in quite nicely. We live in an area where new builds are everywhere, and we made our “money decision” by purchasing a home that was 16 years old rather than 1 or 2 years old like many people we know. That got me a 10 minute commute to work, a great established neighborhood, a cul-de-sac street, and a private neighborhood entrance into a 200 acre park behind us that has been awesome for our family.
Thanks again for sharing your story and teaching people that following the common thinking isn’t always the best choice.
I’d love to see photos of her home as well!
We live on a 37 foot Tolkycraft boat which is about 250 sq feet of living space. When my husband’s kids were younger we had a 1,600 sq foot townhouse, then we downsized to a 900 sq foot condo and now the boat. And I’m happiest here. We have everything we need and nothing we don’t. It takes us on vacation in the summer and we can afford to escape winter. For us, extra space is just something we’ll clutter up with stuff we don’t need and neither of us wants to mow a lawn ever again.
“I’m happiest here.” Oh I love that.
My house is small, but it sure wasn’t cheap! Realtors kept telling me to go further away from work to get more space for the same price, but that meant 1) a longer commute, 2) eventually needing to buy a car, and 3) possibly paying to park at work if I chose to drive or carpool. Either way, it would’ve meant far more Uber rides since I wouldn’t be able to walk everywhere. I chose to buy a smaller home in a centrally located neighborhood, so I could maintain my car-free lifestyle. Meanwhile, my home continues to appreciate at a steady rate. And I get plenty of exercise walking everywhere. Smaller homes also provide the excuse of tossing unwanted gifts because I have nowhere to store them!
Proximity to work and other essentials is worth so much more to me than size of home or other factors.
Agreed!!
I bought mid-way into the range of what I thought I could afford (not what the mortgage people thought). It’s a small house in a really nice neighborhood and in normal times I can bike to work. I am uncertain about the future, of course, but I feel good about having a house in a neighborhood where housing prices will likely stay steadier than elsewhere in my city. No explosive gains, but unlikely to have huge losses either.
It sounds like you made the perfect decision for your family 🙂 close to work is huge too.
Love it! I own a slightly less than 1,250 square foot house with a postage stamp sized yard. It is SOOOOOO easy to take care of and clean. We, too, are close to nearly everything we do so don’t waste a ton of time in the car. Even now, with all the extra activity going on at our house, we are able to make it a bike spinning studio (put the bikes on stationary trainers) and have space to do our strength training (straps and a few weights) and yoga without issue. And we also keep from accumulating too much crap because of the small amount of space. My partner and I share a tiny closet and dresser and really if it doesn’t fit in that space, we shouldn’t be buy it. A few weekends ago, I got caught up with yardwork – it took like 3 half days to get all caught up after ignoring it for probably 5 months… I can’t imagine how much effort it would take if I had more. Cheers to small(ish) homes!
The no ability to hoard crap in closets is a big selling point for me b
Loved this post! We’re still renting right now, but we’re definitely in that stage of life where we’re starting to think about buying (taking one step toward homeownership is one of my 2020 goals). That said, we have had a lot of discussions about what we want from a house and we’re definitely thinking small (and, likely, moving out of the area where we currently live into a slightly more rural setting). It’s still a ways off, though.
What a time to have homeownership as a goal for the year 😅
We have a duplex and rent one unit. The unit we live in is about 1,000 sq ft. That’s enough space for 2 adults, 1 kid, and a cat. That’s in normal time, though. Now that everyone is crammed into the same space 24/7, I wish we have a bigger place.
Hopefully, covid19 will be under control soon and things go back to normal. I really need a bit more space and alone time.
Yeah, houses definitely feel smaller right now. Hope you can at least get out for walks by yourself every day.
We almost bought back in 2008 and we didn’t aim small or within our price range. Luckily we did not buy. We now own a 1200 sq ft house with a pretty big lot. It is the perfect size for us and 2 kids. I prefer smaller houses; it forces us to buy less and afford higher quality items.
I think my spouse would go big if we could afford it though!
I definitely prefer the smaller house, bigger lot (and garden) combo!
We went to about 1500 sqfeet a while ago and while it felt utterly luxurious at the time, it feels even more so now that we’re living and working and schooling all day long within these walls. We had no outdoor space at all in the other place and it’s limited here right now because we haven’t spent the money on landscaping projects yet but we still have more than we did before. When we can work on it, it’ll feel like positively palatial, with both indoor and outdoor spaces, I’m sure 😁
I’ve had the occasional envious moments wishing we could easily afford the 4000-5000 sqfoot homes that our friends in cheaper areas can for half the price but I’d then have to worry about cleaning and furnishing the place and I’m not interested in all that extra work. This is good.
Yeah, I have zero interest in owning a home of that size.
We are in an insanely-large-for-us 2,050 square feet townhouse (which is also insanely large by traditional UK house standards, where a three-bedroom semi usually comes it at around 80 square metres!).
Our house is new construction, and at the time of buying 3 years ago, was actually cheaper than some smaller, 1,700/1,800 in the same area.
We bought it because its a)close to our jobs so we have short commute, b)has a cycle path nearby so we can commute by bike!! c)a house not an apartment so no annual fees etc, d)it should be low maintenance compared to some older houses we saw.
It is the right house for us, for now. Maybe not forever – the compromise was that we have no garden, instead a big terrace (container gardening, the only sort I’ve been able to do so far in my life….), but the reasons I listed above make it the right house for us.
However I am often conscious/self-conscious that it is just too big for us. We have a spare room which is hardly ever used – door closed, gathers dust. We don’t *need* so much space (though we sure appreciate having spare for home maintenance tools which used to get kept in all sorts of weird places before).
Right now though? with self isolation happening, we are SO grateful we are able to both work from home and from separate rooms, so we don’t drive each other made while on calls all day.
Oh yeah, right now being able to spread out has to be LUXURIOUS (as I wfh from our loveseat….)
The condo we rent is about 1250 square feet for the four of us. It’s okay, but I do wish we had two living spaces so we can get a little space from each other. The house I grew up in was about 2700 square feet, with 12 people in my family and an occasional sibling’s friend when they’d get kicked out of their houses, haha. Our lot was about 1/3 an acre. If we don’t have any more kids, I can’t imagine “needing” over 2000 sq ft, but the land…oh man I hate how small yards are now. It was awesome growing up with such a big front and back yard, these micro yards are not cutting it for me. I just want to give my kids space to run around outside more than square footage inside for them to accumulate junk.
Yeah, the big yard has been key right now for getting out in the garden. Again, I could use with twice as much space OUTSIDE. I can imagine that 2700sf for 12 people felt tight!
I feel this to my core… Our current situation is wishing we had a smaller home, but not being in a good position to downsize because of the cons that come with it in our area. We hope to instill outside of the box thinking in our children – letting them know there are different routes than huge home and lots of debt.
With quarantine right now though, a bigger house isn’t all bad 😉
It really is a silver lining in some of this. Having the space to send the children to different areas of the house is a godsend right now, but in general I’d love to downsize!
I really enjoyed your article! My husband and I are purchasing our first home. It’s just short of 800 square feet in our dream neighborhood (tree lined canopy streets, bike/walkable, close to fun)! Our work commutes will be hacked from 30 minutes each way to 9 minutes. The pressure from friends and family to move further from our desired location, spend a little more, and go bigger was unreal. It was tempting but after asking ourselves what OUR needs were and what WE would need to be content/happy, we stuck to our core beliefs and are looking forward to sharing a big life in our small house! Thank you for your thoughtful insight!
Oh that sounds like the perfect home for you!
We—two adults, a teenage son and house pet—live in a small home—about 1100 square feet, with a bit of hidden storage (attic, crawl space, etc not counted in the square footage). The home is a mid century split level, so all of us seem to have space for zoom remote working, remote school, either upstairs, on the ground floor or in the den. I would like a larger living room, but the the house is in the modern style so we have cathedral ceilings that make this feel not crammed in. Our lot is 70 X 100, which is big around here so we have the small house/decent size yard feel. Occasionally, I dream about an extra 500-700 square feet of space, but in this area of the country we are already paying $10,000 in real estate taxes. Those extra square feet would be another 4-5K per year. A 2000 square foot lot would be over 20K in real estate taxes! So I don’t particularly see moving. My son thinks our house is very cozy and I think it is.a very good value these days.
Those property taxes, yikes! We are lucky to live in a place where ours are quite low. If it feels like there’s even room for remote/work and school, I’d say you’re doing well!